There is a new FHA Condominium approval rule as of October 15, 2019.
The notable change in the rule is that it will allow some individual condominium units to be possibly eligible for FHA mortgage insurance even if the condominium project itself is not FHA approved.
This is a big, positive change, as the approval process for condominium projects is lengthy and could knock out a large subset of buyers for a unit if the entire condominium building/project weren’t approved.
This statistic in the HUD.gov press release was staggering to me:
“While there are more than 150,000 condominium projects in the U.S., only 6.5 percent are approved to participate in FHA’s mortgage insurance programs.“
That is such a low percentage that it has made condo financing out of reach for many buyers.
There are still strict rules in place for FHA insured mortgages, and not every individual condominium unit will become FHA-eligible. According to the HUD.gov press release, the following rules apply:
As of October 15, FHA will insure mortgages for selected condominium units in projects that are not currently approved. An individual unit may be eligible for Single-Unit Approval under the following conditions:
- The individual condominium unit is located in a completed project that is not approved;
- For condominium projects with 10 or more units, no more than 10 percent of individual condo units can be FHA-insured; and projects with fewer than 10 units may have no more than two FHA-insured units.
Minimum Owner-Occupancy Requirements
FHA will require that approved condominium projects have a minimum of 50 percent of the units occupied by owners for most projects.
FHA Insurance Concentration in Condominium Projects
FHA will only insure up to 50 percent of the total number of units in an approved condominium project.
Commercial/Nonresidential Space Limits
FHA will require that the commercial/non-residential space within an approved condominium project not exceed 35 percent of the project’s total floor area.”
If you are considering buying a Baltimore condominium and think an FHA mortgage may be right for you, it is important to be both pre-approved for your potential mortgage and to have your lender ensure your condo could be FHA approved under this new rule.
Contact me today to help you buy a Timonium condo. I have a number of professionals who can help guide you through the process!
Please note that this is an FHA rule as of 10/15/19. FHA rules can change at any time.
Please contact your lender to discover the current rules, regulations, and eligibility for FHA insured loans.